The Electricity Capacity Regulations 2014

CHAPTER 2 E+W+S Applicant credit cover

Requirement to provide applicant credit cover E+W+S

59.—(1)  [F1 Subject to [F2 paragraph] (1B), an applicant] to prequalify for a capacity auction in respect of a CMU (“CMU i”) must, if the applicant receives from the Delivery Body a conditional prequalification notice under capacity market rules, provide applicant credit cover in the amount determined in accordance with paragraph (2).

F3 (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F4 (1B) Where an applicant provides applicant credit cover for a capacity auction in respect of an unproven demand side response CMU [F5 or an interconnector CMU], the applicant is not required to provide further applicant credit cover for any subsequent capacity auction in respect of that CMU except in circumstances specified in capacity market rules.]

(2) [F6 Subject to paragraphs (2A) [F7 , (2B) and (2C)], the amount] of applicant credit cover to be provided is—

[F8 (a) in the case of an application to prequalify for a T-4 auction or a T-1 auction—

(i) [F9 subject to paragraph (ia),] if CMU i is an unproven demand side response CMU, an amount equal to £5,000 per MW of the de-rated capacity of CMU i; F10 ...

[F11 (ia) if CMU i is an unproven demand side response CMU, in respect of which the applicant has applied to prequalify to bid for a multi-year capacity obligation and has not yet met the requirements for DSR partial credit cover release in accordance with the Rules, an amount equal to £10,000 per MW of the de-rated capacity of CMU i; and]

(ii) if CMU i is not an unproven demand side response CMU, an amount equal to £10,000 per MW of the de-rated capacity of CMU i;]

(b) in the case of an application to prequalify for a DSR transitional auction, an amount equal to £500 per MW of the de-rated capacity of CMU i.

[F12 (2A) Paragraph (2B) applies where an applicant for a supplementary auction is required to provide credit cover in accordance with this regulation.

(2B) Where at the time applicant credit cover must be provided for the supplementary auction the applicant is maintaining applicant credit cover in accordance with regulation 60 for any other capacity auction (including a T-4 auction held in the same auction window as the supplementary auction) in respect of a CMU (“the original credit cover”)—

(a) in order to prequalify for the supplementary auction in respect of that CMU, the applicant is not required to provide additional credit cover of an amount exceeding the difference between—

(i) the amount determined under paragraph (2)(a), and

(ii) the amount of the original credit cover;

(b) the original credit cover is included in the credit cover that may be drawn down under regulation 61(1)(c) in relation to a capacity agreement awarded in the supplementary auction; and

(c) notwithstanding sub-paragraph (h) of regulation 60(1), any credit cover drawn down in relation to that agreement must be replaced in accordance with the obligation under regulation 60(1) to maintain the original credit cover.]

[F13 (2C) The applicant credit cover provided under paragraph (1) must, where an applicant which applied to prequalify to bid for a multi-year capacity obligation in respect of an unproven demand side response CMU has met the requirements for DSR partial credit cover release in accordance with the Rules, be reduced to an amount equal to £5,000 per MW of the de-rated capacity of the CMU.]

(3) If A is required to provide credit cover under paragraph (1), A must do so within [F14 15 working days] after receiving the conditional prequalification notice.

[F15 (4) In circumstances specified in capacity market rules, the applicant credit cover provided under paragraph (1) in respect of a new build CMU must, where twelve months have elapsed after auction results day, be increased by the capacity provider to an amount equal to £15,000 per MW of de-rated capacity.

(5) The increased credit cover required to be provided under paragraph (4) must be provided within 15 working days after the end of that twelve-month period.

(6) For the purposes of paragraph (4)—

(a) “new build CMU” has the meaning given in the Rules; and

(b) “auction results day” means the date on which the auction results are published under regulation 25(1)(c).]

[F16 (7) In this regulation, “DSR partial credit cover release” has the meaning given in the Rules.]

Textual Amendments

F1 Words in reg. 59(1) substituted (24.3.2015) by The Electricity Capacity (Amendment) Regulations 2015 (S.I. 2015/875), reg. 1(2), Sch. 1 para. 9(1)

F2 Word in reg. 59(1) substituted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 17(1)(a)

F3 Reg. 59(1A) omitted (14.7.2016) by virtue of The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 17(1)(b)

F4 Reg. 59(1A)(1B) inserted (24.3.2015) by The Electricity Capacity (Amendment) Regulations 2015 (S.I. 2015/875), reg. 1(2), Sch. 1 para. 9(2)

F5 Words in reg. 59(1B) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 17(1)(c)

F6 Words in reg. 59(2) substituted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 6(1)

F7 Words in reg. 59(2) substituted (4.7.2020) by The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(1)(a)

F8 Reg. 59(2)(a) substituted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 17(2)

F9 Words in reg. 59(2)(a)(i) inserted (4.7.2020) by The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(1)(b)

F10 Word in reg. 59(2)(a)(i) omitted (4.7.2020) by virtue of The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(1)(c)

F11 Reg. 59(2)(a)(ia) inserted (4.7.2020) by The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(1)(d)

F12 Reg. 59(2A)(2B) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 6(2)

F13 Reg. 59(2C) inserted (4.7.2020) by The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(2)

F14 Words in reg. 59(3) substituted (4.12.2015) by The Electricity Capacity (Amendment) (No. 2) Regulations 2015 (S.I. 2015/1974), regs. 1(2), 4

F15 Reg. 59(4)-(6) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 17(3) (with reg. 1(3))

F16 Reg. 59(7) inserted (4.7.2020) by The Electricity Capacity (Amendment etc.) (Coronavirus) Regulations 2020 (S.I. 2020/697), reg. 1(2), Sch. 1 para. 8(3)

Credit obligation period E+W+S

60.—(1) Where A provides applicant credit cover in respect of a CMU (“CMU i”), A must maintain credit cover in the amount calculated in accordance with regulation 59 until the earliest of the following events has occurred—

[F17 (a) where CMU i is an unproven demand side response CMU, the de-rated capacity for CMU i becomes, in accordance with capacity market rules, less than the product (in MW to three decimal places) of the unproven DSR capacity of CMU i and the de-rating factor;]

(b) where A is required by capacity market rules to provide confirmation to the Delivery Body of its intention to bid in the capacity auction in respect of CMU i, it does not provide such confirmation within the time required by capacity market rules;

[F18 (ba) where A is required by capacity market rules to provide a notice of confirmation or other document as a requirement for being eligible to bid in the capacity auction in respect of CMU i, it does not do so within the time required by capacity market rules;]

(c) the capacity auction is—

(i) cancelled; or

(ii) postponed or stopped, and rearranged, and A gives notice to the Delivery Body (where permitted to do so by capacity market rules) that it does not intend to bid in the rearranged auction in respect of CMU i;

(d) A is unsuccessful in its bid at the capacity auction in respect of CMU i;

(e) A has transferred its capacity agreement in respect of CMU i to another person in accordance with capacity market rules and the transferee has provided replacement credit cover which the Settlement Body has approved;

(f) where CMU i is a demand side response CMU, A has in accordance with capacity market rules provided to the Delivery Body a DSR test certificate which evidences—

(i) a proven DSR capacity equal to or greater than CMU i’s [F19 de-rated capacity]; or

(ii) a proven DSR capacity less than CMU i’s [F19 de-rated capacity], but equal to or greater than 90% of that capacity;

[F20 (g) save where CMU i is an unproven demand side response CMU, A has fully discharged all the requirements in capacity market rules against which its applicant credit cover was secured, and which a failure to meet would result in its capacity agreement being terminated under capacity market rules;]

(h) the credit cover is drawn down under regulation 61.

[F21 (2) Where paragraph (1)(a) applies, A must thereafter maintain credit cover—

(a) for a T-4 or a T-1 auction, in an amount equal to £5,000 per MW of the amount of the [F22 de-rated capacity] of CMU i, or

(b) for a DSR transitional auction, in an amount equal to £500 per MW of the amount of the DSR bid capacity of CMU i,

until the earliest of the events in sub-paragraphs (b) to (h) of paragraph (1) has occurred.]

(3) Where paragraph (1)(f)(ii) applies—

(a) the Settlement Body must draw down part of the credit cover calculated in accordance with paragraph (5); and

(b) the applicant must maintain credit cover in the amount so calculated until it has been drawn down, but is no longer required to maintain the remainder of the credit cover.

(4) Where any other sub-paragraph of paragraph (1) applies, the applicant is no longer required to maintain any credit cover.

F23 (5) The amount of credit cover to be drawn down under paragraph (3)(a) (“DD”) must be calculated in accordance with the formula—

(6) In paragraph (5)—

[F24 “DC” means CMU i’s de-rated capacity;]

“PC” means CMU i’s proven DSR capacity;

“RA” means the required amount for CMU i as calculated under regulation 59;

F25 ...

(7) In this regulation “the capacity auction” means the capacity auction in relation to which applicant credit cover has been provided in respect of CMU i.

Textual Amendments

F17 Reg. 60(1)(a) substituted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(1)

F18 Reg. 60(1)(ba) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 18(1)

F19 Words in reg. 60(1)(f) substituted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(2)

F20 Reg. 60(1)(g) substituted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(3)

F21 Reg. 60(2) substituted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 18(2)

F22 Words in reg. 60(2)(a) substituted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(4) (with reg. 4)

F23 Reg. 60(5): formula amended by the substitution of "DC" for "UC" (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(5)

F24 Words in reg. 60(6) inserted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(6)(a)

F25 Words in reg. 60(6) omitted (2.11.2017) by virtue of The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 6(6)(b)

Draw down of applicant credit cover E+W+S

61.—(1) The Settlement Body must draw down applicant credit cover provided by A in respect of a CMU (“CMU i”) if—

(a) where CMU i is an unproven demand side response CMU—

(i) the credit obligation period has not ended by the date on which the delivery year of A's capacity agreement in respect of CMU i commences; or

(ii) the Settlement Body receives a notice from the Delivery Body that A has provided a DSR test certificate which evidences a proven DSR capacity less than 90% of CMU i's [F26 de-rated capacity];

F27 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) payment of a termination fee [F28 or non-completion fee] has become due pursuant to an invoice issued under regulation 43 [F28 or 43A], and the termination fee [F28 or non-completion fee] is unpaid.

(2) Where the Settlement Body is required to drawn down applicant credit cover—

(a) under sub-paragraph (a)(i) F29 ... of paragraph (1), it must do so within 60 days from the date specified in that sub-paragraph;

(b) under sub-paragraph (a)(ii) of paragraph (1), it must do so within 60 days from the date on which the Settlement Body receives the notice referred to in that sub-paragraph;

(c) under sub-paragraph (c) of paragraph (1), it must do so as soon as reasonably practicable after the date on which payment of the termination fee [F30 or non-completion fee] becomes due.

(3) Subject to paragraph (4), applicant credit cover which is drawn down in accordance with this regulation is forfeited by A.

(4) If, after applicant credit cover has been drawn down, it is determined under Chapter 2 of Part 10 that the credit cover should not have been drawn down, the Settlement Body must pay to A the amount of the credit cover that was wrongly drawn down.

F31 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F26 Words in reg. 61(1)(a)(ii) substituted (2.11.2017) by The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 7(a)

F27 Reg. 61(1)(b) omitted (2.11.2017) by virtue of The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 7(b)

F28 Words in reg. 61(1)(c) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 19(1) (with reg. 1(3))

F29 Words in reg. 61(2)(a) omitted (2.11.2017) by virtue of The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 7(c)

F30 Words in reg. 61(2)(c) inserted (14.7.2016) by The Electricity Capacity (Amendment) Regulations 2016 (S.I. 2016/742), reg. 1(2), Sch. 1 para. 19(2) (with reg. 1(3))

F31 Reg. 61(5) omitted (2.11.2017) by virtue of The Electricity Capacity (Amendment) Regulations 2017 (S.I. 2017/1053), reg. 1(2), Sch. 1 para. 7(d)

Effect of non-compliance E+W+S

62.  A may not bid in a capacity auction in respect of a CMU for which applicant credit cover is required, if A has not complied with this Part in relation to the provision of applicant credit cover in respect of that CMU.